2020 Annual Report
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$QQXDO5HSRUW Dear Fellow Ceridian Stockholders, We hope this finds you safe and well. It was another very strong year for Ceridian, and we are exceptionally proud of how our entire Ceridian team has responded to the dramatic change in the business realities faced by all. We continued to deliver against our five strategic growth levers: growing in our existing markets; expanding within the Enterprise segment; accelerating our global expansion; extending the Dayforce platform; and innovating in adjacent markets, such as Dayforce Wallet. Our growth agenda is about delivering quantifiable value to our customers and creating customers for life. In 2020, we received tremendous validation of our leadership in the global HCM market. Ceridian was named a Leader in the Gartner 2020 Magic Quadrant for Cloud HCM Suites for 1,000+ Employee Enterprises. Further, Ceridian received the highest scores for the North American compliance suites, payroll admin, and the workforce management use cases in the Gartner Critical Capabilities for Cloud HCM Suites for 1,000+ Employee Enterprises. For years, organizations have been thinking and talking about digitization. COVID-19 has made this an imperative overnight. Organizations, globally, are looking for a deeper level of innovation and value from an HCM system as they turn their focus to accelerating their digital transformation initiatives. We are uniquely positioned to help customers navigate this new borderless, more fluid world of work, and that is driving increased demand for Dayforce. We ended 2020 with 4,906 customers live on the Dayforce platform, a net increase of 543 year-over-year. That strong demand for Dayforce helped us exceed our financial and operational targets, while we continue to invest strategically for future growth. Some key metrics that we are particularly pleased with for 2020 include: • Dayforce recurring services revenue increased by $71.2 million or 16.6%. Excluding float revenue and on a constant currency basis, Dayforce recurring services revenue increased by 22.7%. • Dayforce revenue increased by $79.1 million or 13.9%. Excluding float revenue and on a constant currency basis, Dayforce revenue increased by 18.1%. • Cloud recurring services gross margin increased 160 basis points to 71.2%, compared to 69.6% in 2019. Excluding float revenue, Cloud recurring services gross margin expanded 330 basis points. These excellent results and strong momentum in the business enabled us to deliver significant stockholder value in 2020. Ceridian shares on the New York Stock Exchange and Toronto Stock Exchange provided total returns from the beginning of the year of 57.0 percent and 54.2 percent respectively, versus 18.4 percent for the S&P 500 and 5.6 percent for the S&P/TSX Composite Index, over the same time period. Ceridian is one of the fastest growing HCM cloud companies, and we have a strong balance sheet. Our outperformance has given us the flexibility to be opportunistic with acquisitions, like Singapore-based Excelity in 2020 and most recently with our announcement to acquire the Australia-based Ascender. It has also allowed us to make strategic investments in product and technology innovation as well as sales and marketing. It has helped us attract senior executive talent with global experience in finance, product and technology, and human resources. And it is helping to attract global and regional systems integrators as new partners. Together, these investments are key to expanding further in the enterprise segment, scaling the business globally, and sustaining accelerated profitable growth. Today, we have tremendous underlying momentum in the business, and we have an attractive opportunity before us: to gain share and drive scale coming out of the crisis. And that is exactly what we will strive to do. On behalf of the Board of Directors of Ceridian, I want to thank our employees for delivering against our growth agenda in a trying year for all of us. I also want to thank you, our fellow stockholders, for your confidence in us and for your investment in Ceridian. David D. Ossip Chair and Chief Executive Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38467 Ceridian HCM Holding Inc. (Exact name of Registrant as specified in its Charter) Delaware 46-3231686 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3311 East Old Shakopee Road Minneapolis, Minnesota 55425 (952) 853-8100 (Address, Including Zip Code, and Telephone Number, Including Area Code, ofRegistrant’s Principal Executive Offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Syymbol(s) Name of each exchangeg on which regig stered Common Stock, $.01 par value CDAY New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark ifthe Registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act. YES ☒ NO ☐ Indicate by check mark if the Registrant is notrequired to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒ Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Small reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by checkmark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its interrnal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the $79.27 closing price of the shares of common stock on the New York Stock Exchange on June 30, 2020, was $9,582.5 million. The number of shares of Registrant’s Common Stock outstanding as of February 23, 2021 was 148,801,679. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s Definitive Proxy Statement relating to the 2021 Annual Meeting of Stockholders, scheduled to be held on April 27, 2021, are incorporated by reference into Part III of this Form 10-K. Table of Contents Page PART I Item 1. Business 3 Item 1A. Risk Factors 10 Item 1B. Unresolved Staff Comments 25 Item 2. Properties 25 Item 3. Legal Proceedings 25 Item 4. Mine Safety Disclosures 25 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Selected Financial Data 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47 Item 8. Financial Statements and Supplementary Data 49 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 96 Item 9A. Controls and Procedures 96 Item 9B. Other Information 97 PART III Item 10. Directors, Executive Officers and Corporate Governance 98 Item 11. Executive Compensation 98 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 98 Item 13. Certain Relationships and Related Transactions, and Director Independence 99 Item 14. Principal Accounting Fees and Services 99 PART IV Item 15. Exhibits, Financial Statement Schedules 100 Item 16. Form 10-K Summary 102 1 | 2020 Form 10-K Unless the context requires otherwise, references in this Annual Report on Form 10-K for the fiscal year ended December31, 2020 of Ceridian HCM Holding Inc. and subsidiaries (“Form 10-K”) to “our company,” the “Company,” “we,” “us,” “our,” and “Ceridian” refer to Ceridian HCMHolding Inc. and its direct and indirect subsidiaries on a consolidated basis. We and our subsidiaries own or have the rights to various trademarks, trade names and service marks, including the following: Ceridian®, Dayforce®, Makes Work Life Better™, Powerpay® and various logos used in association with these terms. Solely for convenience, the trademarks, trade names and service marks and copyrights referred to herein are listed without the ©, ®, and ™, symbols, but such references are not intended to indicate, in any way, that Ceridian, or the applicable owner, will not assert, to the fullest extent under applicable law, Ceridian’s or their, as applicable, rights to these trademarks, trade names, and service marks.